A recent study has shown that one of the major reasons people get into debt is because of medical bills and illness. Also, unemployment and divorce often lead to financial problems.
The worst thing you can do is to wait for the workers’ compensation settlement to arrive before filing for bankruptcy because there can be a time delay with any personal injury claim. If and when you receive your settlement, it may not save you from foreclosure because you may not get enough to reinstate the mortgage, and/or you may not get the settlement until after the foreclosure is finalized.
Once you file a bankruptcy petition, it will create a stay which will stop the foreclosure. Any bankruptcy will create a stay, except in certain limited circumstances regarding prior bankruptcy filings, which the lawyer will explain to you.
Also, when you file a bankruptcy, the bankruptcy code fully exempts a workers’ compensation claim, and there is a large exemption of $23,675 for a personal injury claim plus whatever wildcard exemption you have left over from 11 USC 522 (d)(5).
In the present situation, Mr. Taieb would advise you to file a Chapter 13 to stop the foreclosure and do a reorganization to try to save the home and seek to eliminate unsecured debt.
Thus, whenever you are in foreclosure and have a worker’s compensation claim or personal injury claim, NEVER delay filing bankruptcy unless you have the check from the settlement, and it will cover the exact amount of the delinquency. If you don’t have enough to catch up and you have no GUARANTEE of when the settlement check will arrive, then be sure to file for bankruptcy. Because timing is everything, one mistake can result in the loss of your home.
If you have any questions concerning this matter or any other bankruptcy matter, contact TAIEBLAW at 856-235-4994, or visit our website at TAIEBLAW.COM and schedule a FREE initial consultation.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 34 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.